Tuesday, October 11, 2011

What Smaller Government Looks Like in the US

Last week's employment report in the US contained a familiar story: the private sector continues to add jobs, albeit at a modest pace, while government layoffs continue to undo a portion of those job gains. In the absence of the current mania to reduce the size of government, the US labor market would have gained closer to 2 million jobs instead of the roughly 1.5 million actually created over the past year.

But it's informative to take a look at exactly which sort of government jobs are being cut. The following table tells the story.

Over the past two years, government employment in the US at all levels (federal, state, and local) has fallen by a bit over half a million. Total federal employment has remained roughly constant (increased defense department jobs have made up for job losses elsewhere in the federal government), and employment by state governments has fallen by a bit. But local government employment has seen by far the largest change over the past two years, with local governments alone accounting for about 90% of all government job losses in the US. And of that, the majority of job losses are education jobs.

The US (along with many countries around the world right now) is currently going through a deeply unfortunate and harmful bout of fiscal contraction, right when it should be doing exactly the opposite. And by acheiving that fiscal contraction primarily by laying off teachers, it appears to have decided to do so on the backs of its schoolchildren.

"Every time you stop a school, you will have to build a jail. What you gain at one end you lose at the other. It's like feeding a dog on his own tail. It won't fatten the dog." Samuel Clemens - 11/23/1900

Alas, I think it's not just the US that's dumbing down its educational system. We can expect much of Europe to do the same, virtually inviting previously under-developed nations to take over our high-profit-margin industries now that they've taken over our manufacturing.

I'm amazed at how short-term-oriented the “cut spending” types are; it's as if they utterly fail to understand investing. While the US previously was one of the better-educated nations, we've fallen to just a bit better than average of developed nations; a few more years and we'll have to be shown how to sign our names on the checks we write to nations we previously looked down on.

This is not jingoism, I salute countries that are clever enough to invest in their future. I'm just sad that we are volunteering to make ourselves stupider, thinking that Mitt's proposal to spend our dwindling wealth on weaponry is somehow going to bring us wealth.

Over the last thirty years most of the carping about the poor performance of American schools was not founded on reality, but was intended to set the stage for converting a public education system into a for-profit chain of "charter" schools, with the failures to be returned to the rump "public" schools. It's similar to the change of the financial system from a socially useful system for allocating scarce capital into a rigged casino, allowing people in certain positions to loot the organizations they are supposedly working for, and society in general. Actually, that part of it goes back even further, to the 1960s.

You're not paying attention. Follow the money. With more and more prisons being run by for-profit corporations, the owners/managers of those corporations know very well how to increase their take-home pay. They could not care less if they destroy the society around them. Same as the bankers.

Laying off people to bring down unemployment is Orwellian. Then again, a key part of Big Brother's Philosophy was that ignorance is strength, thus by laying off teachers we are making America Stronger.

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The Street Light is written by economist Kash Mansori, who works as an economic consultant (though views expressed here are entirely his own), writes whenever he can in his spare time, and teaches a bit here and there. You can contact him by writing to the gmail account streetlightblog. (More about Kash.)